I finally got around to finishing up the financial report for 2013, which I've been alluding to for several posts now. I'll jump right into the numbers and then give some thoughts on where we're standing entering 2014.

Starting off with the expenses, the big things that stand out are the pig feed costs, rent costs, and purchased livestock. The pig feed costs includes the cost to feed 4.25 adult pigs (one died in the spring) and raising 6 piglets for six months. Feed costs are finally dropping, so I might be able to save some here in the future. Rent costs include the rent at our old place, as well as rent the business pays to me and Jen at the new place. I'm sure some would take issue/question the rent we pay to ourselves, but we think it's important to completely separate the business from our personal finances, and this is a great way to help in that regard. Purchased livestock includes $400 for a new gilt and $1050 for two weaned steers. There are lots of other smaller expenses that add up, as well. They should be fairly self-explanatory. I'd tried to minimize as many small, non-essential expenses this year as possible, but there's no way to get rid of everything. Note that the 2 grand I spent on the tractor is not included here, as it gets counted as depreciable asset (I haven't figured out exactly how to depreciate something that is so old and essentially no longer depreciates as long as it is maintained). Total expenses totaled $9267.

On the income side, it's pretty easy to interpret. The vegetable sales sprang from our farmstand and the farmers market. Pork sales are the six pigs we raised, beef sales are the one steer (the other died) and livestock sales are a barren gilt that we sold (essentially trading it for the new gilt). Income totaled $4842.In all, we lost $4,425 this year on the farm, which is about as much as we lost last year. The reasons for the loss are fairly simple: (1) we couldn't sell all the vegetables that we grow, (2) we moved to a new farm at the beginning of the 2013 season, and (3) livestock death and infertility. The vegetables were about a break-even affair when accounting for the cost of the land, cost of seed, fuel, marketing costs, and liability protection. If we were able to sell all our produce rather than just feeding it to the pigs or giving it away, we'd probably been able to make two to three times the revenue. The move affected us mainly by taking away time from planning and forcing us to start the year a step behind. For instance, we had to transplant garlic we'd already planted in Monroe, which drastically reduced our yields (a bummer since garlic was one of our best and most profitable sellers at the market). Lastly, livestock death (and infertility was probably our biggest issue and the proximate cause for the loss). Losing a steer gave took $500 off the books in a day. We were hoping for the sow and three gilts we started out the year with to farrow in March and provide us with 20-30 piglets. Instead, one gilt died, one gilt didn't farrow, one gave birth to 10 dead piglets, and one produced only 6 piglets in May. While it would have been difficult to find buyers for all those piglets, an extra 20 pigs raised to butcher weight adds $5000 in profit. If we had to sell some as weaners, it would have at least balanced out the feed costs for the breeders. If they'd farrowed in March instead of May, we could have got a second summer farrowing that would have produced more weaners for sale.So where does this leave us for 2014? I'm still trying to figure that out, but I can't wait too much longer. I know a few things: we won't be doing a farmers market or farmstand this year--it's just too much work for so little/no reward. We're thinking about perhaps trying vegetables again in 2015, but with a different model (for instance, focusing in on a single crop like garlic). We had overwhelmingly good feedback on our pork quality this year, so it's difficult to want to stop raising pigs. At the same time, we can't keep losing money on the pig operation, and furthermore, we don't have much money in the bank account. At the moment, we have about $1,500 in the account (after investing $6000 last year). We'll know in a few more days how many piglets we'll have to contend with after the pregnant sow and gilt farrow. If they have big litters, we could have up to 25 piglets running around soon (five are two weeks old right now). It would cost us about $7500 to raise those pigs up to market weight. I'd like to do steers again, but we don't have the cash to buy weaned calves this year, or even buy day old calves for bottle feeding. We'll be getting our plan together soon, and we'll be letting you know (either to ask for deposits, or to let you know we have weaners for sale).

I don't know that much about livestock but...Could you raise your piglets up to weaner size sell 1/2 of them and use the proceeds to pay for the feed costs of the remaining piglets?

If you're not growing vegies for sale could you plant a sugar beet garden and allow the market size pigs to "hog it off"?

Mike

Reply

Jeff

1/27/2014 09:42:48 am

I can bring some cash in by selling weaners, but unfortunately the economics are a little more difficult. The best I can probably sell a weaner for is $150, of which about $32 is profit after accounting for the cost of feed and the cost of feeding and caring for the parents. It costs between $200 and $300 to raise a pig to market weight, so I'd need to sell 10 weaners for every one butcher pig.

If you search the archives, you can find some past posts on growing food for pigs. In general, the amount of nutrition per acre you get on something like beets is not worth the investment in time to cultivate the crop. I planted clover last year to try to give some additional pasture based nutrition with much less labor input (and hopefully benefits that will extend beyond one beet harvest/hog down).

Reply

George

1/27/2014 07:19:40 pm

Are you buying in premade rations for the pigs? I couldn't really find much info in the blog about their ration other than the pumpkins and clover/barley plantings you have.... It seems like there really isn't much money to be made on pigs until one scales up to a couple hundred animals... or you have a really great market to sell at to mark up the price.. (I know a few pig guys who sell at $8/lb routinely for virtually all cuts, roasts, bacon, hot dogs etc)...

I imagine you do not have a way to store feed in bulk to lower the costs? I have a few customers who purchase our bulk broiler feed and supplement it with pig minerals and extra protein sources...

What are some options you've come across in your area to lower feed costs? It takes what.. 1200+ lbs to raise to market weight doesn't it?

Reply

Jeff

1/27/2014 11:08:24 pm

I am buying in premade rations from a local feed mill. I'm hoping a rich pasture will help to offset feed costs. I've looked into whey and spent grain in the local area, and there is competition for those feedstuffs right now so it's not so easy to just get free pig food. The other option is grocery store waste, but that can get really messy really fast and I want to keep my pig operation as clean as possible (after all, I live just a few feet from the pig housing area!).

My best option going forward is to partner with an established farm, I think. I've made some progress in that regard, but I don't want to discuss it too much on the blog out of respect for the other parties involved.

Regarding the depreciation of items; most of the time depreciation is for stuff that is durable, and there is often some value left over in excess of the depreciated value. When you sell the tractor, you record the value over depreciated as income and pay tax on that as if it were any other sale.

For the amounts and types of spending listed you could also just expense the item directly, but that only does you good if you have income to offset the expense; by reducing your taxable income.

Regarding feed costs; conway was charging me $540 a ton for me to pick the feed up at their mill. They're charging me $380 a ton to deliver it to my farm. That's a substantial savings. Minimum order is 4 tons, which would be enough feed to finish 10 or 11 pigs, and you'd need a place to store it. a 4-6 polypro bin would be a good fit for your farm, they're translucent so you can see the feed level inside, and they will fit into a 6x6' square so it's compact. Just a thought.

Reply

Jeff

1/31/2014 04:30:37 am

I should be getting a grain bin very soon. My neighbor down the road has several that have been sitting on their sides for many years. Good to know the prices you're getting. I think I paid in the $450 range the last time I picked up a bulk bag.